Intel seeks state financial aid for plant

Intel Corp. wants the state to pony up a multimillion dollar incentive package before the company decides whether to build a huge research and development park near Riverton.

Richard R. Nelson, director of Utah's Industrial Assistance Fund, said Thursday that Intel - producer of chips that power 85 percent of the world's personal computers - has applied for an IAF loan in the "mid-seven figures."The state's Board of Business and Economic Development is scheduled to consider the application Friday after listening to a presentation by as many as three Intel representatives.

Intel had no new statement to make about the application Thursday. The company has repeatedly said its consideration of the Riverton site is one of several expansion options that include building in Texas or expanding existing plants.

Intel has purchased an option on a site bordered by 13400 South on the southern end, 12600 South on the northern end and the Bangerter Highway on the west. The 140 acres of agricultural land is owned by The Church of Jesus Christ of Latter-day Saints.

Nelson said the research park would create 6,000 to 8,000 jobs with average wages of about $50,000 plus benefits. But he cautioned that Intel's board is not expected to make a final decision on its plans for several months.

And even if Intel does choose Riverton, he said, it may not be able to get the loan, because the IAF currently has only $2.8 million in available funds.

"It is clearly understood by Intel and the Legislature and the governor that this is subject to funding . . . by the Legislature," Nelson said.

The Legislature does not convene in regular session until January.

Nelson said Intel probably would not receive all of the IAF money at once, either.

"They would earn credits to repay the principal and interest of the promissory note based on several economic factors," Nelson said. "One would be hiring these high-paid employees, at an average of $50,000. A second one would be buying from Utah suppliers where they can. And there may be one or two others that the board would structure to earn those credits."

He said the state has worked closely with the Economic Development Corporation of Utah in its efforts to lure Intel, which is based in Santa Clara, Calif.

Several factors help explain why Intel remains such a strong candidate to build in southern Salt Lake County while memory chip maker Micron has a 2.5 million-square-foot manufacturing plant sitting unfinished not far to the south in Lehi.

Micron announced its plans to build the Lehi plant in 1995 when DRAM memory chips were selling for $60 apiece. Foreign competitors forced into production to make payments on construction loans flooded the market with memory chips and drove the price to below $2.

Micron, using cash in the bank to pay the $700 million it has spent on its plant so far, halted construction to cut its losses. Micron says it is holding out for a turnaround in the DRAM market and hopes to finish its plant.

Intel, on the other hand, has no formidable competition. The biggest portion of the microprocessor not claimed by Intel belongs to Motorola, which makes microprocessors for Apple computers.

Intel's production and revenues continue to climb with the company projecting third-quarter revenue will be up 8 to 10 percent from its second quarter revenue of $5.9 billion.